Good morning, ladies and gentlemen, and welcome to the GDI Integrated Facility Services, Inc. Second Quarter 2025 Results Conference Call. [Operator Instructions] This call is being recorded on Thursday, August 7, 2025. I would now like to turn the conference over to Charles-Etienne Girouard, Senior Vice President and Chief Financial Officer. Please go ahead.

Thank you, operator. [Foreign Language] Good morning, all, and welcome to GDI's conference call to discuss our results for the second quarter of fiscal 2025. My name is Charles-Etienne Girouard. I am Senior Vice President and Chief Financial Officer of GDI. I am with Claude Bigras, President and CEO of GDI; and David Hinchey, Executive Vice President of Corporate Development. Before we begin, I would like to make you aware that this call contains forward-looking information, and we ask listeners to refer to the full description of the forward-looking safe harbor provision that is fully described at the beginning of the MD&A filed on SEDAR last night. I will begin the call with an overview of GDI financial results for the second quarter of fiscal 2025 and will then invite Claude to provide his comments on the business. In the second quarter, GDI recorded revenue of $610 million, a decrease of $29 million or 5% over 2024. This is mostly due to the organic decline of 4%. GDI recorded adjusted EBITDA of $34 million in the quarter, in line with Q2 2024, which represents an adjusted EBITDA margin of 6%, increasing 1% over Q2 of last year. On a year-to-date basis, revenue reached $1.23 billion, a decrease of $57 million or 4% over the same period of 2024. Year-over-year decline was primarily due to an organic decline of 5%. Adjusted EBITDA in the first half of the year amounted to $67 million, an increase of $6 million or 10% over the corresponding period of 2024. Our Business Service Canada segment recorded revenue of $147 million in the second quarter, up 1% over Q2 2024, while generating $10 million in adjusted EBITDA, down $1 million compared to Q2 last year. Adjusted EBITDA margin was 7% compared to 8% in Q2 2024. Our Business Service U.S.A segment recorded revenue of $204 million in Q2, a decrease of 8% over Q2 2024. The segment experienced an expected organic decline of 11% in Q2, which reflects the paring down of low-margin accounts from our Atalian acquisition, which was carried out through the course of fiscal 2024 as well as the loss in Q1 2025 of the remaining 20% of the large client loss during Q1 of fiscal '24. In addition, revenue generated by one customer fluctuated based on the volume of recurring project work, which was lower in the second quarter of 2025 compared to last year. This segment reported adjusted EBITDA of $14 million, representing an adjusted EBITDA margin of 7%, an increase of 1% over Q2 last year. The Technical Service segment recorded revenue of $252 million compared to $264 million in Q2 last year. The segment generated adjusted EBITDA of $14 million, which is $2 million higher than Q2 2024, representing an adjusted EBITDA margin of 6% compared to 5% in Q2 2024, the increase being mainly attributable to higher margin in project revenue. Finally, our Corporate and Other segment reported revenue of $7 million compared to $9 million last year and negative adjusted EBITDA of $4 million compared to $3 million in Q2 2024. I would like to turn the call to Claude, who will provide further comments on GDI performance during the quarter.

Thank you, Charles-Etienne, Masse, and thanks to everyone participating in our GDI Q2 '25 earnings call. I'm relatively pleased with GDI's overall performance in Q2 this year. Our Business Service Canada segment delivered results that were in line with historic performance. However, we began to experience some softness in the business during the quarter. We had a higher-than-normal degree of churn in our client base, which we believe is due to higher than historic vacancy rate coupled with economic uncertainty from the threat of tariffs. This has caused some of our clients to either bring contract to market or otherwise pressure margins. And in response to this, we have taken strategic action to reduce our cost structure across the business. We also have invested in new sales resources in both Canada and the U.S. to enhance both client retention and stimulate organic growth. We expect continued softness in the business over the next few quarters as the initiatives we have implemented takes hold, and we will continue to focus on winning business with a margin profile that is sustainable for the long term and the good health of the business. Our Business Service U.S. segment had a good quarter. As we have previously managed -- messaged, organic growth was hampered by the paring down of low-margin contracts and some -- from the Atalian acquisition and that was carried out to 2024. Additionally, as expected in Q1 2025, we have terminated the remaining 20% of the business from the large client that exited in Q1 2024. Despite this decline in revenue, the business delivered the same level of adjusted EBITDA on a quarter-over-quarter basis with an increase in EBITDA margin from 6% to 7%, which is the important part of the equation. Our Business Service U.S.A segment has secured a number of new contract wins that we are expecting to start up in Q3, and we will continue to expect a return to historic organic growth level towards the end of 2025. In mid-2024, we have implemented and adjusted our sales strategy with a greater focus on higher growth and higher-margin end markets and invested in resources in both sales and operations to target these markets. The strategy to grow our Business Service segment in these stickier markets where cleaning is more technical and give us the ability to develop long-term partnership with our clients. And to date, these initiatives have been successful, and we have been realizing new contract wins. GDI Technical segment had a very strong quarter, generating $14 million in adjusted EBITDA and a margin of 6% in what is typically the segment's second weakest quarter. Notably, we delivered these results in a quarter where revenue were under pressure. A slow start to summer caused lower-than-anticipated HVAC service revenue. And due to the economic uncertainty, certain clients delayed the start-up of project work. The outlook for this business remains quite positive, and we are seeing very high temperature across Canada and the U.S. Northwest, which is helping our HVAC service business. Additionally, our project backlog is close to record high and backlog margin is 100 to 200 basics -- base points higher than historic. Ainsworth is currently firing on all cylinders. During Q2, our operations and finance team continued to focus on GDI balance sheet. Working capital was stable in Q2 compared to Q1 2025, and we generated a slight decrease in long-term debt. The structural initiatives that we put in place at the end of '23 and early '24 are bearing fruit, and our team is remaining focused on cash efficiency. Our balance sheet is strong. Our leverage ratio sits comfortable under 3x EBITDA, and we're well positioned to execute on our growth strategy. So that concludes our formal portion of the earnings call. Operator, please open the line to analyst questions.

[Operator Instructions] Your first question comes from Cheryl Zhang with TD Cowen.

This is Cheryl calling in for Derek. So my first question is with regards to Business Service Canada. In the press release, you commented on the softness of that business with higher level of contract churn and margin pressure. Just curious if you can provide more color around what you're seeing in demand and what you're hearing from your customers?

Thank you, Cheryl. What we're looking at the market is there is -- and what we're seeing with our customer base is, there is definitively a cost, I would say, an aggressive cost management approach to business. So we are navigating through that. Our focus remains on customer retention. And again, I've been saying it for years is our focus is always on keeping the margin and having sustainable margin. So yes, it's a little bit costly on the term, but we are investing instead of cutting margins to a point where it's not sustainable to do business, we are focusing on sales growth and investing in that. But yes, there is a general sense in the business of savings, and we don't want to get entangled into a downward spiral of profitability.

Got it. That's very helpful. And maybe one more before I requeue. So on Business Services U.S.A, you noted that you have secured several new contract wins to offset the loss of that remaining business of a major client. Just curious what is the nature of these new contracts, like what type of industry or what type of work?

Okay. Well, first, I would like to say that, as you know, about 1.5 years ago, 2 years ago, we started building a strong sales team. I should not maybe say that, but I'm very happy that we started that some time ago because we would be in a difficult -- it would be more difficult or more challenging for us. The team is really delivering, especially in the U.S. and now we're implementing the sales strategy in Canada. So this has been delivering good results. We operate mainly in our traditional sectors, industrial. But like I was saying, the good news is we have invested on operating and business development talent in some very -- I would say, higher margin and more technical sector of cleaning. It's a big undertaking, but we have seen very good win this year so far. So we continue to focus on that. So the idea is you have to sell to cope for what we have lost, keep the margin and attack and get more business in higher-end markets where the margins are more sustainable. It's a very simple strategy, but it would be proven to be efficient in times where we're doing it.

[Operator Instructions] Your next question comes from Frederic Tremblay with Desjardins.

Frederic A. Tremblay: Just coming back to Canada. In the U.S., we've seen the -- I walk away from some low-margin contracts at Atalian, for example. Just trying to gauge the -- I guess, your view on Canada as it relates to the margin pressure. Are you willing to also walk away from some agreements and sacrifice a bit of the growth near term to make sure that you sustain those margins that we've seen in past quarters there?

Well, Frederic, this is -- you know what, this -- I will say it like this. This disciplined approach sometimes is costly on ego. But again, this is exactly what we do is we are not -- we are really, really working hard with customers, but there's a point where we cannot just reduce it to a point where it will attack our -- either our quality and reputation or the margin. So yes, it's a costly decision to do on the top line. But on the bottom line, if you look, you know what, the loss of margin is not comparable to the decline in organic growth because we are keeping this disciplined approach to pricing. And that's the only ticket long term. Short term, you know what, I get beaten up a little bit, but long term, I think it's the right thing to do.

Frederic A. Tremblay: Yes. That's really helpful comments. Maybe switching to Business Services U.S.A. I think last quarter, you sort of mentioned that you expected the organic growth there to come back to more normalized levels around late 2025. We're seeing minus 11% organic decline in Q2. Is your expectation still to be more at normalized levels towards the end of this year? Or has that changed?

Well, the answer, Frederic, is twofold. There's a mathematical answer. We lost this huge client last year. And you know what, we hear that they would be coming back to the market sooner than later. So that's not a bad thing. But we like these huge clients. So mathematically, as the quarter passes and we keep these numbers and organic growth, you know what, it will do an upswing. And secondly, our very strong sales approach will also pop up these numbers. So this is why we say by the end of 2025, it should all adjusted and back into a normal organic growth. But a little bit of it is mathematical through the client movements for sure.

Frederic A. Tremblay: Yes. Understood. Okay. And then just lastly for me on potential M&A. Just wanted maybe to get a few comments on what you're seeing in terms of the flow and, I guess, number of opportunities. Has that changed lately one way or the other? And similarly, like multiples that sellers are expecting, like are you seeing a good pipeline of transactions that you could potentially complete at similar multiples than what we've seen you do in the past?

Okay. Okay. So Frederic, let me do a comment. Again, David will look at me at the big eyes. But listen, lately, what we have been seeing is we've been looking at some businesses that were very aggressive over the last 3, 4 years on acquisitions. And if you remember, I was saying that we have to keep discipline. I can tell you that I'm very happy we kept discipline. So you know what, you cannot be -- you cannot buy everything at any price and be happy and have no debt and generating cash. So I'm very happy we kept our disciplined approach to that. Secondly, yes, there is a pipeline. We're working hard on it again. Disciplined approach is the key element. The -- you know what, the multiple that we were seeing during COVID, a little bit pre-COVID, where there was a lot of -- I would not say private equity back. I did not say it. Businesses that were actually, I would say, driving the multiple up. I think that it's more quiet on that front. So I think we're reverting back to a more reasonable multiple. And hopefully, our work will bear fruit sooner than later.

Your next question comes from Zachary Evershed with National Bank Financial.

Could you go into more detail on the specific types of contracts that are experiencing the highest churn? Any particular customer type or region?

I would say that -- I don't have my latest report on Business segment, but I would say it's more in the traditional B&I businesses more or less. This is where we experienced the largest churn, commercial real estate. So this is where we have to -- these -- I would say that these sectors are compressible on service short term. So I think that these clients, as soon as the market, I think, will get in a better place and they realize that there is a cost of reducing their services will come back to the market. This is what we have seen. And every time -- I've been in this for 40 years almost. I've seen it all the time. There is a big contraction in margin pressure. Customer, they do some -- they do manage differently, and they come back to a more normal sector, and we're happy campers. So yes, B&I has been primarily the sector.

Got you. And has that affected your outlook for the sector in the context of hybrid work and downtown office occupancy trends?

Well, for sure, you know what, we see that there is a reoccupancy that is gradually getting in place. I cannot tell you -- I don't have a forecast of occupancy in the next 1, 2, 3 quarters. But I do feel like over the next 2, 3, 4 quarters, we'll see occupancy to gradually also increase, but this was to be expected at some point.

Got you. And then just one last one for me. Could you give us a refresher on the types of strategic initiatives you're implementing to address that margin pressure and contract churn?

Okay. Well, I would say that we are working -- well, Zachary, the only -- in our book, the only right strategy in those times is to keep focus and focus on sales and business development. You know what, we are focusing on higher-margin sectors where we feel it's more sticky, but it is an investment. We invested a couple of millions in resources and technical and expertise and systems, but it's the right thing to do. Secondly, we continue to invest and grow our sales force across both markets because, again, the remedy to churn is not to cut margin, is to be more aggressive in developing customers. So this is the 2 main things we're doing on our strategy. Thirdly, for sure, we have to adjust, and we adjust our operating expenses, but without sacrificing the sustainability of the company and -- but we are coping with the market volatility. But again -- you know what, shrinking your way to greatness is not the best approach all the time, but we're adjusting to market volatility. So this is mainly the strategy we're doing to cope with the churn and the market pressure.

There are no further questions at this time. I will now turn the call -- one moment, please. There's another question from Cheryl Zhang with TD Cowen.

Just a couple of follow-ups. One, so is there any update on the timing of the Sany Solutions building sale?

Okay. Yes. The Sany Solution building, we expect to close probably by the end of September. The building is, as you know, is still under contract. Most of the -- I'm sorry to say that my English is bad. I'm going to need help. Conditions? Okay, thank you. Most of the conditions are waived. So we're just expecting to close at the end of -- between now and the end of September.

Got it. And are there any changes to your expectations for working capital and CapEx for the year?

Okay. You know what, Cheryl, let's go back to the first question. You asked me the Sany Solution building for me, is the Quebec building. This is the one you were referring to?

Yes.

Can you repeat the question, your second question, please?

Yes. So I was just curious if -- like what your expectations are for working capital and CapEx for the rest of the year?

CapEx, we're very savvy on CapEx, for sure, in those market conditions. We -- again, its cash is king. So we're very savvy. We spend money where we have new projects, new contracts and where we need to replace some equipment. But we're not overspending. We're keeping our IT transformation program because it's very important. And on cash management, we continue to be very adamant on managing cash. People, it's all hands-on bridge on managing the cash, managing our customer, DSOs. And so yes, this is the first priority all the time. As you see, you know what, we're not depleting cash, we're paying the debt a little bit. And we expect between now and the end of the year, it's going to continue to improve. Yes.

Okay. Got it. It's great to hear. And just one final one for me. So how is the project volume trending in Technical Services? And what is the backlog in that business?

Okay. Well, you know what, for sure, it's normal. We always -- we focus always on the chart that shows a little bit of volatility. But on the Technical side, you know what, I think a lot of things have happened over the last year. As you see, even though we had a slower start of the season, even though that our revenues were a little bit down, you saw the margin increase, and we're very optimistic between now and the end of the year. So the work we have done there is really bearing fruit. And the backlog is still very high, almost like our record high. And the Sep margin is about 150 to 200 bps higher. So it's all very good signs. So yes, the Technical business, we're optimistic on it. And again, if we on the business side -- the Business Service side, we have it a little bit of bumpies because of the market volatility. On the Technical side, we are doing good. So I think we'll take everything we can take.

Okay. That is awesome. Sorry, just one final one for me. So in the Business Services U.S.A., you highlighted one of the new customer contracted volume kind of ebbs and flows between quarters and had low volumes, I think, from Q4 through Q2. Just curious where you see volume trending in the second half of 2025.

It's -- again, I think everybody knows what's happening lately in the global geopolitics and everything. So this, I have no control over it. So -- but again, I can tell you this is with what we're doing in the U.S., the effort of the sales teams, the wins that we have, the start- up we have in Q3, notwithstanding that, you know what, the clients are still very adamant on savings. I think that by the end of the year, we're going to be back to a normal cruising speed on the business U.S. But again, yes, the top line, but the bottom line, I think it's still pretty acceptable. And again, this is always the focus, I'm saying to the team is, you know what, we need to make sure that the business we do is profitable. This is always the key element.

There are no further questions at this time. I will now turn the call over to Claude for closing remarks.

Well, thank you very much, operator. Thank you, everyone, for participating in our call. As we said, we're spending time and working on the -- and improving the Business Service segment, working on sales growth. And as we are navigating in some volatility, I do believe that we're doing the right things. And people are focused on the business. And again, our strategy is based on business sales and business growth. It's on adjusting the business and it's keeping the margin and optimizing our Technical business. This is a simple strategy, but that's a strategy that people understand, and it's a strategy that will make us go through those times and win. So this is our focus. So thank you again, and I want to thank the team for all the efforts we're doing, and we look for the continuity in the next quarters and to improve. Thank you very much.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.